The National Bank of Ethiopia (NBE) is to introduce a secondary market in the coming budget year to unravel new financial sources for the private sector that has been dependant on Government Treasury Bill tenders (T-bills).

Up to date the government tenders treasury bills through the NBE to supplement its budget, than borrowing directly from the central bank.

According to Yohannes Ayalew, chief Economist and Vice Governor of NBE, stated, the introduction of the second market will advance the monetary system. The advancement of the bond market will sequentially encourage the T-bill market and promote competition between the two markets.

Maturity period of the bond market is longer than T-bills and extends attractive interest rates.

The bond market will serve as a financial reservoir for the private sector to secure capital for investment or to invest in bonds for profit.

When the bond market begins, government and corporate bonds are the two types of bonds that will be availed by the government and the private sector.

The first bond market was launched in Ethiopia through the Development Bank of Ethiopia (DBE) to fund the Grand Ethiopian Renaissance Dam project.

Ethiopia joined the international bond market in this budget year, selling a bond worth one billion US dollar to western investors.

Source: Capital